Rulka Electricals IPO Subscribed 676.83 times

About the Rulka Electricals IPO

The stock of Rulka Electricals IPO has a face value of ₹10 per share and it is a book built issue. The price for the book building issue is set in the price band of ₹223 to ₹235 per share. Being a book built issue, the final price will be discovered within this band. The IPO of Rulka Electricals Ltd has a fresh issue component and an offer for sale (OFS) portion. While the fresh issue portion is EPS dilutive and equity dilutive, the OFS is just a transfer of ownership and  hence is not EPS or equity dilutive. As part of the fresh issue portion of the IPO, Rulka Electricals Ltd will issue a total of 8,42,400 shares (8.42 lakh shares approximately), which at the upper band IPO price of ₹235 per share aggregates to fresh fund raising of ₹19.80 crore. The offer for sale (OFS) portion of the Rulka Electricals IPO comprises the sale of 2,80,800 shares (2.81 lakh shares approximately), which at the upper band IPO price of ₹235 per share aggregates to OFS component of ͅ₹6.60 crore.

The entire 2.81 lakh shares in the OFS are being offered by investor shareholder, Abhay Kantilal Shah HUF. Therefore, the overall IPO size will comprise of the issue of 11,23,200 shares (11.23 lakh shares approximately) which at the upper band IPO price of ₹235 per share will aggregate to overall IPO size of ₹26.40 crore. Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 56,400 shares. Sunflower Broking Private Ltd will be the market makers to the issue. The market maker provides two-way quotes to ensure liquidity on the counter and low basis costs, post listing. The promoter holding in the company currently stands at 86.28%. However, post the fresh issue of shares, promoter equity holding share will get diluted to 69.22%. The fresh issue funds will be used by the company for funding working capital expenses. Beeline Capital Advisors Private Ltd will be the lead manager to the issue, and Bigshare Services Private Ltd will be the registrar to the issue. The market maker for the issue is Sunflower Broking Private Ltd. The IPO of Rulka Electricals Ltd will be listed on the SME IPO segment of NSE.

Read more about Rulka Electricals IPO

Final subscription status of Rulka Electricals IPO

Here is the subscription status of the Rulka Electricals IPO at the close of 21st May 2024.  In the table below, the anchor investment and market quota are given in italics. That is because, while they are part of the issue, they are not used in the overall calculation of the oversubscription. The final data has been captured from the National Stock Exchange (NSE) data on May 21, 2024.

Data Source: NSE

As can be seen from the above table, the overall IPO of Rulka Electricals Ltd got subscribed an impressive 676.83 times. The HNI / NII portion led the stakes with 1,350.15 times subscription, followed by the Retail portion at 658.32 times subscription. The QIB portion of the IPO also got a healthy subscription of 204.22 times. That is a very strong and robust response to an SME IPO, especially if you consider the median subscriptions that similar other SME IPOs have got in the past. The subscription has shown strong traction for the IPO across all the three categories of investors; QIB, retail and HNI / NII investors.

Allocation quota for various categories

The issue was open for QIBs, retail investors and the HNI / NII investors. There was a broad quota designed for each of the segments viz. the retail, QIB and the HNI / NII segments. A total of 56,400 shares were allocated as market maker portion to Sunflower Broking Private Ltd, which will act as the market maker inventory to provide bid-ask liquidity on the counter post listing. Market maker action not only improves liquidity in the counter but also reduces the basis risk. The table below captures the allocation reservation done for each of the categories out of the total number of shares offered in the IPO.

Data Source: Company RHP

In the above IPO of Rulka Electricals Ltd, the anchor allocation of 3,19,200 shares was carved out of the QIB portion, as a result of which the QIB offer to the public reduced from the original 47.44% of the issue size to 19.02% of the issue size. The anchor allocation bidding opened on May 15th, 2024 and also closed on the same day. A total of 3,19,200 shares were allocated across 7 anchor investors. The anchor allocation was done at the upper end of the IPO price band of ₹235 per share (which includes face value of ₹10 per share and premium of ₹225 per share).

The total anchor allocation value was worth ₹7.50 crore. The 7 anchor investors who got allotted the full 100% of the anchor portion included an array of hedge funds and alternate investment funds (AIFs), apart from domestic bodies corporate that also participated in the anchor allocation of the IPO. Out of the anchor shares allocated to investors on May 15th, 2024, a lock in of 30 days will be applicable for 50% of the shares (up to June 21st, 2024) and a lock-in of 90 days will be applicable for the remaining shares (up to August 20th, 2024). The allocation of market maker inventory of 5.02% is outside the anchor portion.

How subscription built up for the Rulka Electricals IPO

The oversubscription of the IPO was dominated by the HNI / NII followed by the Retail category and the QIB category in that order. The table below captures the day-wise progression of the subscription status of Rulka Electricals Ltd. The IPO was kept open for 3 working days.

Here are the key takeaways from the subscription numbers on a day-wise basis for Rulka Electricals Ltd as of the close of the IPO on 21st May 2024.

• The HNI / NII portion got the best subscription in the Rulka Electricals Ltd IPO at 1,350.15 times and it got 5.26 times subscribed on the first day of the IPO itself.
   
• The Retail portion was behind the HNI / NII portion in terms of subscription at 658.32 times overall and it got 10.78 times subscribed at the end of the first day.
   
• The QIB portion was third in the pecking order in terms of subscription at 204.22 times overall and it got 1.01 times subscribed at the end of the first day.
   
• While Retail portion, HNI / NII portion, and the QIB portion getting fully subscribed on Day-1, the overall IPO also got fully subscribed on the first day of the IPO itself, due to the impact of retail and HNI / NII portion.
   
• The overall IPO which saw subscription of 676.83 times got subscribed at 6.81 times at the close of the first day of the IPO. Let us now turn to how the last day traction on the IPO subscription played out across categories.
   
• Let us start with the HNI / NII portion. The HNI / NII portion saw the total subscription ratio moving from 27.62X to 1,350.15X on the last day of the IPO. That is a substantial amount of traction on the last day.
   
• Like the HNI / NII portion, even the retail portion saw very good traction on the last day of the IPO. On the final day of the IPO, the total subscription ratio for retail investors moved from 52.84X to 658.32X on the last day of the IPO.
   
• The strong last day traction was the case in the QIB investors also, which is natural as they see most of the flows on the last day. The QIB portion saw the total subscription ratio moving from 4.62X to 204.22X on the last day of the IPO.
   
• Finally, regarding the overall IPO subscription ratio, the move was obviously strongest on the last day of the 3-day IPO. The overall subscription moved from 33.66X to 676.83X on the last day of the IPO.

Next steps after the closure of the IPO

The issue opened for subscription on 16th May 2024 and closed for subscription on 21st May 2024 (both days inclusive). The basis of allotment will be finalized on 22nd May 2024 and the refunds will be initiated on 23rd May. In addition, the demat credits are also expected to happen on 23rd May 2024 and the stock is scheduled to list on 24th May 2024 on the NSE SME segment. This is the segment, in contrast to the mainboard, where IPOs of small and medium enterprises (SMEs) are incubated. The demat credits to the demat account to the extent of allotment will happen by the close of 23rd May 2024 under ISIN Number (INE0R7301013).